Asian stocks fall in reaction to China rate rise

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Inflation fears drove Asian markets down to their worst performance in three weeks as Hong Kong stocks tumbled to the lowest level this year in the wake of China’s interest rate rise.

The FTSE Asia-Pacific index fell 1.1 per cent to 265.76 as most of the region’s markets had their first chance to react to Beijing’s tightening move that came late on Tuesday.

“The Chinese rate hike had been expected for some time,” Lee Sun-yeb of Shinhan Investment told Reuters. “However, investors are reacting to it by offloading [shares] sensitive to foreign exchange swings and Chinese demand.”

Hong Kong’s Hang Seng index sank 1.4 per cent to 23,164.03 with property developers and resource companies leading the falls.

The Hang Seng’s property sub-index fell 2.4 per cent with mainland developers hit the hardest, New World Development slumping 4.2 per cent to HK$13.84 and Sino Land losing 4 per cent to HK$14. City bellwether Sun Hung Kai Properties fell 2.4 per cent to HK$124.30.

Hang Lung Properties, a Hong Kong-based company that gets about 16 per cent of sales from China, lost 3.5 per cent to HK$31.65. Agile Property Holdings, which builds homes in China’s southern Guangzhou province, was down 1.7 per cent to HK$11.68.

Expectations of softer demand for commodities saw CNOOC, China’s biggest offshore oil explorer, drop 2.8 per cent to HK$16.42 while Jiangxi Copper, China’s producer of the red metal, slipped 2.9 per cent to HK$24.80.

The Shanghai Composite index fell 0.9 per cent to 2,774.07 on its first day of trading for a week following the lunar new year holiday.

Seoul’s Kospi index lost 1.4 per cent to 2,045.58 as investors braced for Friday’s central bank rate-setting meeting. Profit-taking hit carmakers with Hyundai Motor falling 2.8 per cent to Won176,000.

Tokyo’s Nikkei 225 Average fell for the first time in four days, down 0.2 per cent to 10,617.83, while Mumbai’s BSE Sensex index hit fresh seven-month lows, softer by 1 per cent to 17,592.77.

Billionaire Anil Ambani’s Reliance group of companies were hit by sharp sell-offs that has led to it complaining to India’s markets regulator over alleged illegal targeting of shares.

The worst hit, Reliance Infrastructure, sank 19 per cent to Rs531.70, its steepest fall for 28 months.

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